Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1887-09-23
Taxation of Mortgages.


at the late meeting Of the convention in Bal
timcre on the 14th instant, which is the
ablest argument we have yet observed favor
able to the taxation Of mortgages
The only other portion of the wealth of the
Stale not liable by law 10 taxation, is money
invested in mortgages on property in this
State.
The present assess able value Of the real and
personal property of the State, including
notes, judgments and private securities Of all
kinds, is $473, 452, l42. Gov. Lloyd, In his
message 70 the General Assembly Of 1885,
estimates the sum at present Invested in mort
cages upon property In this State, not liable to
taxation and not included in the taxable basis,
to be over 5000, 600, 900. II this amount be
added to the property now liable to taxation,
there would be an increase OF one-half OF the
present basis and corresponding reduction
Of one-third in the amount Of the tax bills Of
those who now pay all the taxes. Farmers,
by the necessity of their calling, have their
capital or stock in trade, 80 TO speak, In
lands, cattle and machinery and as class
they would be relieved of taxation to the ex-
tent OF one-third Of the amount now paid on
them, If this exemption were repealed and the
aggregate value Of the money 30 invested adj
ded to the taxable basis.
The original Bill of Rights adopted at the
organization of the State government, de-
clared "that every person In the State, or
person holding property therein, ought to
contribute his proportion of public taxes for
the support of the government, according 10
his actual worth in real and personal prop
erty." This provision has been engrafted In
each succeeding Constitution of the State, and
still remains part Of our organic law.
AS the contest of the people Of the Ameri-
can Colonies with the King OF Great Britain
was the result of an attempt to impose taxa
ton upon an unfair principle, it is reasonable
to conclude that the insertion OF the clause in
the Bill of Rights, when independence was
secured, was intended by the Revolutionary
Fathers of this State, as declaration of the
highest and most authoritative character, that
in the future equality of taxation, according
to actual worth, was to be- CT --incident and
necessary accompaniment of that other prin-
ciple OF the equality Of all people before the
law.
2 In the consideration o! this question we
have not overlooked the suggestion, some
times urged by the advocates Of the exemption
of mortga yes, that the imposition of taxes
upon them would be double taxation.
In reply to this ii may be said, that the
Constitution does not prohibit double taxa
ton except as matter of inference from the
provision above recited. The Court Of APP
peals in the case of the State vs.. Sterling, 20
Md, 500, says 1.-THE principle OF liability for
taxes in proportion to actual worth in real and
personal property, declared by the Bill of
Rights, is bar to double taxation" The
mandatory requirement of the Bill OF Rights,
that every person ought TO pay taxes accord
ing to his actual worth in real and personal
property is certainly much stronger in favor
IF ;pc l,,I; tad In
cages, than the inference sought to be de-
duced, that this kind of wealth should be ex-
cluded for fear double taxation would follow.
Nor can it be successfully urged that double
taxation was sought to be avoided, when the
exemption of mortgages was made, for money
loaned on notes, bonds and judgments bind
ing on property was still left liable 10 taxa
ton. The objection TO double taxation is as
applicable to money represented by notes,
bonds and judgments binding on property, as
to that represented by mortgage.
Double taxation is not an uncommon thing
in agricultural and mercantile transactions.
The merchants stock in trade is taxed. II
he sells o portion Of il on credit and is COM
PEELED to obtain judgment on the debt, the
amount of the judgment is liable to taxation
as well as the stock in trade. The law re-
quires the Clerks of the Courts TO return to
the County Commissioners a list of all judg-
ments. and they are placed on the tax list
against the owner. A sells horse 10 and
takes his note, sells 10 @ and takes his note,
sells to d and takes his note, and the sale Of
the same horse may ntinue until the amount
Of the sales may be represented by thousands
instead OF the original hundred. AS note
BIS note and C's note are all liable to taxa
ton, as well as the horse in the hands Old.
If A sells lis farm to B on credit, the farm
l. a L.. g.. L.
chase money is taxed against A. II B then
sells the same land to c on credit, A is taxed
for the purchase money due 10 him, B is tax
ed for the purchase money due to him and @
is taxed for the farm. Yet If the contract Of
sale, or the note or Judgment for the purchase
money is merged into mortgage, which is
security OF higher and better nature, it is
seriously urged that the act of merger by some
legal legerdemain Immediately changes the
whole transaction, and 1t would be double
taxation to impose taxes upon the holder Of
the highest and best obligation known to the
law for the security of wealth. and operate as
a wrong to the holder.
Is wealth necessarily swallowed up and lost
by taking pledge Of a neighbours land for its
repayment Is not the percentage Of loss less
ter of security?
In practice, the multiplication Of taxation
will be found to apply to nearly all personal
property which is the subject of sale and pur-
chase, from the time it is taxed as the stock in
trade of the manufacturer, down into the
hands of the jobber, the wholesaler, the re-
taller and finally the purchaser. The objec-
ton OF double taxation has less force in Its ap-
plication to money invested i n mortgages than
TO any other kind of personal property or Sc
curity. In the case of mortgage, there will
be but two taxes charged, one upon the prop
erty and one upon the money, while in the case
of other personal property, as above illus
trated, the tax will be multiplied as often as
there are persons to purchase on credit.
No such objection to the taxation of mort
cages has been considered in any other State
In the Union. The committee has examined
the tax laws Of many of the States and none
of them show any such exemption. The policy
Of the prosperous and rapidly developing States
of the West and Northwest, where agriculture
fiourishes and into which the great tide of
immigration from our own, as we'll as other
Eastern States, and Europe, flows for the pur-
pose of engaging in this pursuit, taxes mort
cages in the same manner and to the same
extent as other property.
Tax Commissioner Woolford in his report
to the Legislature in 1884, shows the condi-
ton of affairs and the circumstances under
which the exemption from taxation Of money
invested in mortgages was made. The Gov
ernment Of the United States was offering
bonds for sale at six per cent. interest, free
from taxation. Numerous railroads and other
enterprises were seeking capital at high rates
OF interest This exemption was a concession
to capital to prevent it from seeking invest
ment outside Of the State. That condition Of
things no longer exists and yet it is still urged
that the repeal of the exemption Of mortgages
would drive capital out Of the State. The APP
prehension of this happening and, perhaps,
threats ON the part of lenders have in all prob
ability had much to do with preventing
modification of the present law. With the
present tendency, however, to lower rates Of
interest all over the country, investors would
be reluctant to surrender home security for the
uncertainty of foreign investments, which
promise no more remunerative returns. II is
well-known fact that throughout this State,
stocks and bonds of no better security than
mortgages on land, and yielding no more
than the legal rates Of interest find plenty of
purchasers at large premiums. The money
markets Of the Country show that money is
begging for investment at and and fire.
quently at per cent.
II is impossible TO ascertain with anv d.